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U.S. stock markets displayed volatility on Friday, effectively halting a three-day upward trend that had been fueled by optimism regarding potential reductions in trade tensions.
The Dow Jones Industrial Average incrementally increased by 20 points, or 0.1%, concluding at 40,114. Meanwhile, the S&P 500 experienced a notable rise of 40 points, or 0.7%, finishing at 5,525. The Nasdaq Composite surged 1.3%, benefiting significantly from gains in major tech companies, particularly Nvidia.
President Trump has recently moderated his trade rhetoric, which has eased investor anxieties and catalyzed the recent stock market rally following a turbulent day of trading earlier in the week. Paul Ashworth, the chief North America economist at Capital Economics, noted in a Friday report that recent market downturns significantly influenced the president’s reconsideration of his steep 145% tariffs on imports from China.
Simultaneously, the markets are responding to mixed messages from the White House concerning prospective trade agreements. While Mr. Trump has alluded to a potential accord with China, Chinese officials have stated that active negotiations are not currently taking place. A report from CNN indicated that China is retracting its 125% tariffs on U.S. semiconductors, hinting at a possible softening of its previous stance.
“The market is heavily influenced by headlines, leading to unpredictable spikes in volatility and wide fluctuations,” explained Bret Kenwell, a U.S. investment analyst at eToro. “This trend is likely to persist until we gain clearer insights into the evolving situation.”
In a Time interview released on Friday morning, Mr. Trump asserted that his administration has negotiated 200 trade agreements, which are set to be revealed within the next month.
CEOs Highlight “Elevated Uncertainty”
Amidst the ongoing trade discourse, several corporations expressed concern about the elevated uncertainty stemming from the trade policies, making it challenging to project financial outlooks.
After Intel announced “elevated uncertainty across the industry,” its stock plummeted 6.8% despite the company surpassing early-year earnings expectations. Its forecast for future revenue and profits, however, fell short of analyst predictions.
Similarly, shares of Eastman Chemical dropped by 5.9% after it provided profit projections for the upcoming spring that did not meet expectations. CEO Mark Costa remarked that the prevailing macroeconomic unpredictability has intensified, rendering future demand for the company’s products uncertain due to the extensive scope of tariffs.
Skechers U.S.A. chose to withdraw its financial forecasts for the year due to global trade policy uncertainties, despite having reported a record revenue quarter of $2.41 billion. Its stock fell by 4.3% as a consequence.
Recent Trade Developments
In recent weeks, President Trump and various administration members have engaged in discussions with other nations regarding bilateral trade agreements. This follows a temporary halt of his “reciprocal tariffs” for 90 days, which has offered a moment of relief for markets and consumers alike. Analysts at UBS noted that this delay signifies the president’s recognition of the potentially damaging effects of tariffs on market activity.
“While we anticipate continued volatility in equity markets, the risk-reward profile for stocks appears increasingly attractive. This is particularly true now that we understand Trump is attentive to the risks associated with his tariff policies,” stated David Lefkowitz, head of U.S. equities at UBS Global Wealth Management, in a research note.
Lefkowitz acknowledged that the slowdown attributable to tariffs could impede corporate profit growth but projected that the economy may rebound next year as both businesses and consumers adapt to the tariffs, alongside potential interest rate cuts from the Federal Reserve.
There are indications that tariffs on China could be reduced to between 50% and 65%, as reported by the Wall Street Journal this week. However, analysts caution that even with reductions, the U.S. economy may still face challenges, as remaining tariffs could continue to hinder economic expansion.
“While the initial unveiling of tariffs might have represented a peak, significant burdens continue to affect companies and the economy as a whole,” noted Adam Crisafulli, an analyst at Vital Knowledge. “This issue is far from resolved.”
As trading concluded on Friday, although U.S. markets showed signs of fatigue, the decrease in 10-year Treasury yields alongside a strengthening U.S. dollar provided some optimism. The yield on the 10-year Treasury, which had reached 4.4% earlier in the week, scaled back slightly to 4.3%. Meanwhile, the U.S. dollar displayed resilience, showing strength against the euro and other foreign currencies.
Internationally, European indexes showed marginal increases, following diverse movements observed in Asian markets, where Japan’s Nikkei 225 index rose by 1.9%, contrasting with a slight dip of 0.1% in Shanghai’s stocks.
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